Preparing for different types of disruptions is a key component of effective supply chain management.

However, as businesses begin implementing the Internet of Things into operations, making the industry more complex, it is becoming increasingly difficult for global supply chains to forecast potential disasters.

Potential threats
Research conducted by Zurich Insurance Ltd. and the Business Continuity Institute found that, last year, due to lack of visibility, 74 percent of businesses across the globe experienced supply chain disruptions, which ended up costing some of the companies over a million dollars, The Wall Street Journal reported.

The researchers also revealed that, of all possible disruptions supply chains may experience, the most frequent are unexpected outages, delays from weather, Internet attacks and transportation problems. Furthermore, it was also found that most global companies don't have continuity plans in place with suppliers.

Zurich's director of strategic business risk, Linda Conrad, told The Wall Street Journal that these interruptions can result in significant monetary losses and hurt supplier relationships.

In a recent interview with DC Velocity, Yossi Sheffi, director of the Massachusetts Institute of Technology's Center for Transportation and Logistics and author of "The Power of Resilience: How the Best Companies Manage the Unexpected," pointed out that the issue of cybersecurity is relatively new and, as more systems begin using digital technologies, the likelihood of an attack increases.

On the other hand, Sheffi added, there are many software applications that can be used to alert a business of possible threats, such as a cyberbug, and inform it of potential risks and repercussions to better prepare the company to respond.

The source also explained that natural disasters are still a concern for global supply chains because if it is impossible to see a threat approaching, it's impossible to know how to prepare for it.

Reducing supply chain risk
Regardless of the type of disruption, Sheffi said one of the most important steps in reducing supply chain vulnerability is having a definitive emergency response plan in place. Manufacturers, he suggested, should turn to the supply chain and engineering divisions.

"Supply chain management should focus on inventory - looking at how to acquire more supplies where needed and seeking alternative suppliers," Sheffi said. "Engineering should look for damage solutions."

As a company expands and implements additional processes and systems in its operations, the number of potential threats it faces will continue to grow. But while the Internet of Things may make supply chains more susceptible to unplanned attacks, it also gives businesses access to technologies for better control and improved predictability processes.

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